IJM CORPORATION BERHAD (Company No A)

Transcription

1 IJM CORPORATION BERHAD (Company No A) Presentation to the shareholders of IJM Corporation Berhad in relation to the proposed privatisation of IJM Land Berhad by way of a members scheme of arrangement pursuant to Section 176 of the Companies Act, January

2 1. Overview of the Proposed Privatisation On 9 June 2014, IJM announced the Proposed Privatisation to be undertaken via a members scheme of arrangement between IJM Land, IJM and/or its nominee(s), and all the Scheme Shareholders pursuant to Section 176 of the Act involving the acquisition by IJM and/or its nominee(s) and transfer of all the Scheme Shares to IJM and/or its nominee(s). The offer consideration for each Scheme Share is RM3.55 which will be satisfied through: the issuance of 0.5 IJM Share to be issued at the issue price of RM6.66 per IJM Share RM0.22 in cash The issue price of RM6.66 per IJM Share and RM0.22 in cash for each Scheme Share has been adjusted for the IJM 2015 Dividend declared by the IJM Board on 25 November

3 1. Overview of the Proposed Privatisation (Cont d) Based on 558,772,287 IJM Land Shares held by the Scheme Shareholders (representing 35.85% of the issued and paid-up share capital of IJM Land as at 30 November 2014), the total consideration for the Proposed Privatisation is approximately RM1.98 billion to be satisfied in the following manner: IJM Shares IJM Land Shares Per unit Total Units Units (RM) (RM billion) Consideration Shares 279,386, Cash Consideration - 558,772, Total

4 2. Basis and Justification for the Offer Price The Offer Price of RM3.55 represents a premium based on the following historical market prices of IJM Land Shares: (Source : Bloomberg) * Adjusted share price was arrived at after deducting the IJML Dividend # VWAMP Volume weighted average market price up to and including the date prior to the Proposal Letter Share price IJML Dividend Adjusted share price* Premium (RM) (RM) (RM) (RM) (%) Last Traded Price day VWAMP # month VWAMP # month VWAMP #

5 2. Basis and Justification for the Offer Price (Cont d) The total consideration of RM1.98 billion translates into PER and PBR of times and 1.68 times, respectively, as follows: IJM Land Group Audited as at 31 March 2014 Ratio Profit after tax and minority interests RM million (excluding gain on re-measurement) times Net assets RM3.28 billion 1.68 times 5

6 2. Basis and Justification for the Offer Price (Cont d) The PBR and PER above falls within the range of the trading PBR and PER based on the closing share price of the comparable companies on the Last Trading Day i.e. 5 June 2014: Comparable Company PER PBR (times) (times) UEM Sunrise IOI Properties SP Setia Mah Sing E&O High Low Average

7 3. Basis and Justification for the Issue Price The issue price of RM6.66 represents the following premium and/or discount to the historical market prices of IJM Shares: Share price IJM Dividend IJM 2015 Dividend Adjusted share price* (Discount) / Premium RM RM RM RM RM % Last Traded Price (0.09) (1.33) 5-day VWAMP # month VWAMP # month VWAMP # (Source : Bloomberg) * Adjusted share price was arrived at after deducting the IJM dividends # VWAMP Volume weighted average market price up to and including the date prior to the Proposal Letter 7

8 4. Valuation of Material Real Estate IJM and IJM Land had jointly appointed the Independent Valuers to conduct the valuation of the material real estate of IJM Land Group, which accounts for 72.0% of IJM Land Group s NBV 8

9 4. Valuation of Material Real Estate (Cont d) Real Estate Equity Interest by IJM Land Independent Valuer Audited NBV as at 31 March 2014 (RM mil) Market Value Surplus (RM mil) (RM mil) Bandar Rimbayu 60% Knight Frank 1, , Pantai Sentral Park 100% Knight Frank The Light Waterfront and Bandar Sri Pinang 80% Knight Frank , ,736.2 Royal Mint Gardens 51% Knight Frank LLP

10 4. Valuation of Material Real Estate (Cont d) Real Estate Equity Interest by IJM Land Independent Valuer Audited NBV as at 31 March 2014 (RM mil) Market Value Surplus (RM mil) (RM mil) S2 Heights 100% Raine & Horne Seremban 2 100% Raine & Horne Bandar Utama Sandakan 100% CH Williams Shah Alam 2 100% Raine & Horne Total 3, , ,

11 5. Rationale and Benefits of the Proposed Privatisation In line with your Board s intention to obtain full control of IJM Land by making it a wholly-owned subsidiary Greater liberty to plan and decide on the strategic and future business direction of IJM Land Leverage on IJM s financial standing and resources to assist in the growth of IJM Land and to strengthen IJM Land s position to undertake larger scale projects in the future Provides an avenue for the Scheme Shareholders to swap their IJM Land Shares which have been traded at low liquidity level with IJM Shares 11

12 6. Effects of the Proposed Privatisation Before the Proposed Privatisation After the Proposed Privatisation IJM existing shareholders IJM existing shareholders Scheme Shareholders 100% Scheme Shareholders 84.2% 15.8% 64.15% 35.85% 100% IJM does not intend to maintain the listing status of IJM Land upon completion of the Proposed Privatisation 12

13 6. Effects of the Proposed Privatisation (Cont d) Share Capital The issued and paid-up share capital shall increase by approximately 18.7% post Proposed Privatisation: Minimum Scenario No. of IJM Shares (mil) Maximum Scenario No. of IJM Shares (mil) As at 30 November , ,489.4 To be issued assuming full exercise of the ESOS Options 1, ,491.2 To be issued pursuant to the Proposed Privatisation Enlarged issued and paid-up share capital 1, ,

14 6. Effects of the Proposed Privatisation (Cont d) Earnings and EPS Based on the proforma illustration below, the Proposed Privatisation is expected to contribute positively to the enlarged IJM Group: Audited for FYE 31 Mar 14 RM mil After the Proposed Privatisation RM mil Net profit attributable to the owners of our Company Add: Net profit of the IJM Land Group * Proforma profits of our enlarged Group ,019.0 Weighted average number of IJM Shares in issue (mil) 1, ,684.0 Basic EPS (sen) *Represents the remaining 35.85% share of net profit of the IJM Land Group 14

15 6. Effects of the Proposed Privatisation (Cont d) NA, NA per IJM Share and gearing Based on the proforma illustration below, the new issuance of IJM Shares will improve the shareholders funds of IJM post Proposed Privatisation and accordingly improve the gearing of the enlarged IJM Group from 0.48 times to 0.43 times: Shareholders funds / NA NA per IJM Share (RM) Net gearing (times) Audited as at After adjustments for the exercise of Warrants 2009/2014 and ESOS After Proposed Privatisation 31 March Options from 1 April 2014 Minimum Maximum 2014 up to 30 November 2014 Scenario Scenario (RM'mil) (RM'mil) (RM'mil) (RM'mil) 6, , , ,

16 7. Approvals required The Proposed Privatisation is subject to the following being obtained: Approvals required 1 Grant of waiver by the SC pursuant to PN 44 of the Code 2 Approval of IJM shareholders 3 IJM shareholders for the issuance of the Consideration Shares to certain Directors and IJM major shareholders and persons connected to them Status Obtained on 24 July 2014 To be obtained at today s EGM Waiver from Bursa Securities obtained on 26 June Approval of Bursa for the listing and quotation for the Consideration Shares Obtained on 19 December

17 7. Approvals required (Cont d) The Proposed Privatisation is subject to the following being obtained: (Cont d) 5 6 Approvals required Approval of the Scheme by the Scheme Shareholders at the Court Meeting of IJM Land Sanction of the Scheme by the Court and the lodgement of the office copy of the sealed order with the Registrar of Companies Malaysia Status To be obtained by IJM Land To be obtained by IJM Land 17

18 8. Tentative Timeline Listing of Consideration Shares 8 January 2015 Court Meeting Lodgement of Court Order March 2015 Payment of cash consideration to Scheme Shareholders February 2015 April 2015 EGM Extraction of Court Order Completion of Proposed Privatisation 18

19 IJM CORPORATION BERHAD (Company No A) QUESTIONS FROM MINORITY SHAREHOLDER WATCHDOG GROUP IN RELATION TO THE PROPOSED PRIVATISATION OF IJM LAND BERHAD BY WAY OF A MEMBERS SCHEME OF ARRANGEMENT PURSUANT TO SECTION 176 OF THE COMPANIES ACT, January

20 Q1. As stated on page 1 of the Circular, pursuant to the waiver obtained from Bursa Securities from having to comply with Paragraph of the Listing Requirements, the independent adviser is no longer required for the Proposed Privatisation. i. Please explain for the benefit of the shareholders the reason or rationale for seeking a waiver and on what basis was the waiver granted. ii. Would the non-requirement of an independent adviser not deprive shareholders an access to an independent view and recommendation and, therefore, may be detrimental to their interests? iii. However, on page 18 (Section 9(a)), it was also stated that the grant of waiver by the Securities Commission Malaysia ( SC ) pursuant to PN44 of the Code from certain provisions was subject to, among others, obtaining the SC s consent for an independent advice circular. Please explain. 2

21 Reply to Question 1(i) The Proposed Privatisation is a related party transaction ( RPT ) pursuant to Paragraph of the Listing Requirements in view of EPF s interests in both IJM and IJM Land as EPF is a major shareholder of IJM and held more than 5% in IJM Land at the time of the initial announcement on the Proposed Privatisation on 9 June A waiver was sought from complying with Paragraph of the Listing Requirements based on, inter-alia, the following justifications:- a) EPF did not initiate and is not the promoter of the Proposed Privatisation, and had no knowledge of the Proposed Privatisation prior to the release of the initial announcement of the Proposed Privatisation on 9 June In other words, EPF s position is no different from the other shareholders of IJM who would have only known about the Proposed Privatisation via the same announcement; 3

22 b) given that EPF does not have any control or influence on the Boards of IJM and IJM Land in relation to the Proposed Privatisation since it does not have any representative on both the Boards of IJM and IJM Land, and the Proposed Privatisation cannot be approved by EPF solely, it may not be fair to preclude or deprive EPF from exercising its right as a shareholder, similar to any other noninterested shareholders of IJM, especially when EPF is a statutory institution that manages funds belonging to the general public and hence, is accountable to its contributors; and b) there is no preferential treatment being extended to EPF pursuant to the Proposed Privatisation because all the non-interested shareholders of IJM Land are extended the same terms and conditions under the Proposed Privatisation. 4

23 Reply to Question 1(ii) Due to reasons stated in the Reply 1(i) above, the non-availability of an independent view and recommendation on the Proposed Privatisation would not be detrimental to the interests of the non-interested shareholders of IJM, especially when EPF s position is no different from the other shareholders of IJM and EPF is not extended any preferential treatment pursuant to the Proposed Privatisation. Reply to Question 1(iii) The condition as set out in Section 9(a)(2) on page 18 of the Circular in relation to obtaining the SC s consent for an independent advice circular is a condition imposed by the SC to be fulfilled by IJM Land and not by IJM. 5

24 Q2. We also noted from page 19 of the Circular that IJM s interested major shareholder, EPF, and certain IJM directors also have shareholdings in IJM Land. In view of their interests in the Proposed Privatisation, a waiver had been sought and obtained from Bursa Securities which would allow them to vote on the resolution pertaining to the Proposed Privatisation to be tabled at the forthcoming EGM. Please explain for the benefit of shareholders the reason or rationale for seeking a waiver and on what basis was the waiver granted. 6

25 Based on the justifications as set out in the responses to Q1(i) and Q1(ii), Bursa Securities had granted a waiver from compliance with Paragraph of the Listing Requirements, so that EPF would be allowed to vote on the resolution pertaining to the Proposed Privatisation. On the other hand, the Interested Directors are allowed to vote on the resolution pertaining to the Proposed Privatisation because the Proposed Privatisation is not regarded as RPT (notwithstanding the interests of the Interested Directors) by virtue of Paragraph 10.08(11)(c) of the Listing Requirements. Notwithstanding that Interested Directors are allowed to vote, they have voluntarily abstained from voting on the resolution pertaining to the Proposed Privatisation. 7

26 Q3. As shown on page 8 of the Circular, the Offer Price of RM3.55 for each Scheme Share (IJM Land Share) is at price-to-book ratio ( PBR ) of 1.68 times. In the case of the Consideration Share (IJM Share), based on the Issue Price of RM6.66 for each IJM Share, what is the PBR? If the valuation of Material Real Estate were to be factored in for both IJM Land and IJM, what would be the respective revised PBRs? 8

27 Based on the IJM Group s audited net assets ( NA ) attributable to owners of IJM as at 31 March 2014 of RM6.74 billion, the Issue Price represents a PBR of 1.41 times. If the net revaluation surplus arising from the valuation of the Material Real Estate were taken into account, the adjusted audited NA of the IJM Group and IJM Land Group as at 31 March 2014 would be RM8.27 billion and RM5.67 billion respectively. Accordingly, the PBRs of the Issue Price and Offer Price would be 1.15 and 0.98 respectively. 9

28 Q4. Page 8 of the Circular also states that the Offer Price of RM3.55 for each IJM Land Share represents price-to-earnings ratio ( PER ) of times. In the case of the Consideration Share (IJM Share), based on the Issue Price of RM6.66 for each IJM Share, what is the PER? At an issue price of RM6.66 per share, how does it fare or stand in comparison with other comparable companies in terms of PBR and PER? 10

29 Based on the IJM Group s adjusted net profit attributable to the owners of IJM for the financial year ended 31 March 2014 of RM million (after excluding RM million, being IJM s share of the gain on re-measurement arising from the acquisition of additional equity interest in Radiant Pillar Sdn Bhd by IJM Land), the Issue Price represents a PER of times, which falls within the range of trading PERs of IJM s selected comparable companies, namely Sunway Berhad, WCT Holdings Berhad and Gamuda Berhad, of between 7.63 times and times based on the closing share prices of these comparable companies on the Last Trading Day (i.e. 5 June 2014). BasedontheIJMGroup sauditednaattributabletoownersofijmasat31march 2014 of RM6.74 billion, the Issue Price represents a PBR of 1.41 times, which falls within the range of trading PBRs of IJM s selected comparable companies of between 1.03 times and 2.16 times based on the closing share prices of these comparable companies on the Last Trading Day. 11

30 Q5. Apart from having Maybank Investment Bank Berhad ( Maybank IB ) as the Principal Adviser, IJM also appointed a Financial Adviser, Newfields Advisors Sdn Bhd ( Newfields ). Please enlighten shareholders why Maybank IB s role could not be expanded to include that of a Financial Adviser. Shareholders may also wish to have a better understanding of what specifically are the areas and differences in work scope performed by the two different advisers. 12

31 The primary responsibilities of the Principal Adviser in relation to the Proposed Privatisation are as follows: assist IJM with the overall management and co-ordination of the transaction; advise on compliance with the guidelines and disclosure requirements of the various regulatory authorities including but not limited to the SC and Bursa Securities; and submit the necessary applications pertaining to the Proposed Privatisation to the SC and Bursa Securities on behalf of IJM and liaise with the various regulatory authorities on these applications on behalf of IJM. 13

32 On the other hand, Newfields, who had been exploring ideas/proposals with the Management on restructuring of IJM s property division for this transaction, their primary role as Financial Adviser had encompassed advising on the appropriate strategies, including methods and the corresponding terms, to privatise IJM Land. In its capacity as Financial Adviser, together with the Principal Adviser, Newfields also co-ordinates the workstreams of the other professional advisers appointed by IJM to ensure an expeditious completion of the Proposed Privatisation. 14

33 Thank You 15